Nigel Lawson's sixth budget proved to be his last. The following autumn Mr Lawson came into conflict with the prime minister and resigned over differences in exchange rate policy and the European ERM. The budget was a cautious one, haunted by the spectre of inflation which had risen to 7.5%. Labour leader Neil Kinnock called Mr Lawson "a chancellor who is fast becoming Mr Inflation".

National insurance Contributions reduced leaving most people £3 a week better off.

Tax thresholds Thresholds on inheritance tax and VAT increased.

Pensions The earnings rule which penalised state pensioners who worked after retirement was abolished.

Duties Duty on unleaded petrol cut by 3.6p a gallon, making it nearly 10p cheaper a gallon than leaded. No other changes to excise duties on tobacco products, alcohol or car tax.